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More details on HDB Lease BuyBack Scheme released yesterday. It will help 25,000 needy households

IN a bid to help low-income elderly Singaporeans unlock their flats’ values, the Minister for National Development Mah Bow Tan unveiled more details about the HDB Lease BuyBack Scheme (LBS) during Budget 2008 yesterday.

Some 25,000 households, or 70 per cent of two-and three-room flat owners will benefit from it.

Under this scheme, HDB will purchase the tail-end of the flat’s lease from the home-owner. The value will depend on market conditions.

The flat will then be left with a 30-year lease, which the home-owner will continue to live in.

For example, if you live in a three-room flat (with a 70-year lease) valued at $200,000, you will get $97,000.

This sum will include $87,000 for 40years of your flat’s lease and a $10,000 government subsidy.

Of this, $92,000 will go to the purchase of the CPF Life Plan and $5,000 will be paid out to you in cash.

The CPF Life Plan will pay you about $490 a month for the rest of your life.

The LBS is not the only way you can unlock the value of your flat.

There’s also the NTUC Income’s reverse mortgage plan, which allows you to borrow against the value of your flat and receive a cash advance from them, either in a lump sum or a series of regular payouts.

The loan is repayable when the property is sold, usually upon the death of the borrower or expiry of the mortgage tenure.

AT LEAST 62 YEARS OLD

To qualify for the LBS, you must be at least 62, live in a three-room or smaller flat, and earn less than $3,000 a month.

While some we spoke to liked this option, others thought the estimated payout was too little to keep up with rising living costs.

Home-maker Madam Lee Kiu, 65, is not so sure the payout amount will be sufficient.

Mdm Lee said her household expenditure is at least $1,000 a month, and a payout of even $500 a month is not enough.

She said in Hokkien: ‘It’s good that we get a regular income from this scheme but I don’t think the amount is enough for me to want to sell my flat to HDB. Food prices have gone up, I need at least $1,000 a month to feed my family.

‘And what if I need a huge sum of money for medical reasons or some emergency? I can’t sell my flat to raise the money if that happens.’

She currently lives in a three-room flat in Holland Drive with her husband, an odd-job labourer in his 70s.

Their son, who has just graduated from the National University of Singapore, also lives with them.

The couple bought their 700 sq ft place for about $130,000 in 1985.

The market value for their place is around $300,000 now, according to HDB resale statistics.

Madam Lee would also prefer to have the option of leaving her flat to her son in the future.

Another resident, who only wanted to be known as Madam Tan, would rather rent out her place and live with her niece.

This 70-year-old currently lives in a three-room HDB flat in Toa Payoh, which her mother bought for $7,500 in the 1960s.

The market price for her place is about $200,000 now.

Madam Tan, who lives alone, said: ‘It’s not as good as me renting out the place. I can get $1,400 per month for the place and live with my niece instead. The cost of living is quite high and I don’t think $460 a month will go very far, unless you really need the money.

‘I don’t want to be tied down with that. I want to have the option of selling it to raise cash if need be. It’s still an asset to me.’

ERA Realty Network’s assistant vice-president Eugene Lim said this scheme benefits those who want a regular source of income.

He added: ‘It’s not a lot of money but it’s better than nothing. This scheme targets those who need the additional source of income.

‘But those who are financially okay may not take to this scheme. They probably will prefer the flexibility of being able to sell their place whenever they want, just in case they need that extra cash for medical reasons.’
 
Source : NewPaper - 29 Feb 2008